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Spotify stock surges amid rising subscriber count, spending scale back

Spotify shares pop nearly 12% Tuesday for the stock's best day since January 2022.

Video Transcript

SEANA SMITH: Look at that jump, shares popping nearly 13%. It's the biggest one-day pop that we've seen in this stock in just about a year, and on the move coming on the back of the company's fourth quarter earnings report. Spotify co-founder and CEO Daniel Ek was very upbeat on the earnings call, making the case for how Spotify is reimagining its spending moving forward.

DANIEL EK: "We will continue to work to build the platform of the future. And that will take investment in new opportunities that we outlined like podcasts and audiobooks. And if anything, thanks to our position in users and subs, this should allow us to both increase revenue per user over time, as well as improve our stickiness with consumers even more. But going forward, we will do it with an intense focus on efficiency. And that marks a pretty big shift in how we will act."

SEANA SMITH: Efficiency certainly was a theme on that earnings call, Dave. And it looks like the street really cheering on what they heard from Ek, what they saw in these results with the stock up 12.7% today.

DAVE BRIGGS: God, the numbers are insane. 489 million monthly active users. That is up 20% year over year, 205 million paid subscribers. That's up 14% and ad revenue's up 14%. Not much to dislike about this report, and going back to when they reduced headcount. Also a positive for investors, they cut 6% of their workforce. And right after that was reported, Daniel Ek in an internal memo said he was too ambitious in investing ahead of our revenue growth.

Let's go back in time. $200 million for "The Joe Rogan Experience". They had a couple of other acquisitions that they paid too much for as well. Gimlet Media, Parcast, The Ringer. So clearly, less M&A activity, better for investors, hard to ignore the massive growth they're seeing there.

SEANA SMITH: Yeah, very hard to ignore. We know the emphasis is going to be on that margin progress. Wells Fargo saying that this year is going to be a pivotal year for that. And that is something that investors are going to continue to focus on.